A recent report indicates the number of people who have been able to get a home loan has dropped drastically since the implementation of new regulations over the past several years.
What is kind of regulations?
The new regulations that were put in place to take into account an applicant’s combined debt, which includes other loans such as car loans, personal loans, and unsecured lines of credit, which in most cases means credit cards.
This means you have less leniency on how much existing debt you can have when seeking approval for a home loan.
How Badly Are People Affected
A recent report from a major banking institution reports that only 12 potential buyers out of 80 were able to get the full loan amount they required to buy a house. According to some other bankers, loan rejection rates have risen to 20-25% after the implementation of regulations.
What does this mean for you?
It means that if you don’t qualify then YOU have to come up with the rest in cash.
What Can You Do About It?
We could preach till the cows come home about good financial management, and how important it is to keep your debts low. However this is not new advice, and until people are forced to exercise more discipline, spending will continue to stretch past a comfortable line.
Lowering your debt will be a key factor in not just the rate you are approved for, but whether you even get approved in the first place.